This invention relates, in general, to investments in securities, and more particularly, to the evaluation of investment portfolios.
Indices, such as indices for 28-day municipal bonds and 90-day commercial paper, are commonly used to evaluate the investment return of an individual""s investment portfolio. One problem with these indices is that they are not suitable for a direct comparison of the investment portfolio because each of these indices indicate an average return for the entirety of investments in the index, and the indices are not based upon a mix of assets in an investor""s investment portfolio. For example, the 28-day municipal bond index indicates the return for only the 28-day municipal bond market. However, it is unlikely for an individual""s investment portfolio to contain investments in only a single class of investments. Therefore, the investor must segregate the investment portfolio to include only those investments that fall within the class of investments represented by the index before making the comparison. Additionally, individual comparisons of different portions of the investment portfolio must be made with different indices to evaluate the entire investment portfolio, which is a complicated and time consuming process. Furthermore, it is also difficult to evaluate the entire investment portfolio as a whole when using this method of evaluation.
Moreover, even if an individual""s investment portfolio only contains investments within a single class of investments represented by a particular index, the index is still not an accurate reflection of an average investment return for that class of investment. The inaccuracy results from the fact that, during each business day, an index represents a different set of investments within the investment class because the investments in the index are exchanged on a daily basis. However, a typical investor does not sell and then buy all of his or her investments each and every business day.
Accordingly, a need exists for a more convenient and more accurate evaluation or benchmarking of an investment portfolio.
In accordance with the principles of the present invention, a benchmark portfolio is provided to be customizable to an investment portfolio such that the benchmark portfolio tracks various investment changes made by an investor over time. Further in accordance with the principles of the present invention, the customization is dynamic. Still further in accordance with the principles of the present invention, each customization can be recorded as a historical event. Yet further in accordance with the principles of the present invention, the investment return of the benchmark portfolio is based on the recorded customizations. Additionally in accordance with the principles of the present invention, the benchmark portfolio includes select asset classes, which include a sweep account, where each asset class includes at least one security that is representative of a set of specifically screened securities within the asset class.